SONAL PARAG SHAH, MUMBAI V. ITO 21(2)(4), MUMBAI

ITA 5450/MUM/2013

• Counselvise Citation: 545019914 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 15-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: RA JEEV WAGLAY
• Keywords: Capital asset; Capital receipt
• Section: 148

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH , !' , ! BEFORE S/SH.JOGINDER SINGH, JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.5450/MUM/2013, # # # # $ $ $ $ / ASSESSMENT YEAR-2009-10 MRS. SONAL PARAG SHAH, 17/18, 4TH FLOOR,SWASTIK BUILDING, N.S.ROADNO.1,J.V.P.D. SCHEME, VILE PARLE (W), MUMBAI-400056 PAN: AQPS1855M # VS. ITO 21(2)(4), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ( %& / APPELLANT) ( '(%& / RESPONDENT) ) * ! / REVENUE BY : SHRI NEIL PHILIP # # # #+, +, +, +, * * * * ! !! ! / ASSESSEE BY : SHRI RAJEEV WAGLAY # # # # ) )) ) ,- ,- ,- ,- / DATE OF HEARING : 03 -02-2015 .$ ) ,- / DATE OF PRONOUNCEMENT : 03 -02-2015 # # # # , 1961 ) )) ) 254(1) ! !! ! ,, ,, ,, ,, !/ !/ !/ !/ ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. ! !' ! # : CHALLENGING THE ORDER DATED 19.07.2013 OF THE CIT(A )-22, MUMBAI, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ON THE FACTS & THE CIRCUMSTANCES OF THE CASE, THE L D. CIT (A) - 22 ERRED IN:- 1. HOLDING THAT THE AMOUNT OF RS. 7,78,125 WAS ASSE SSABLE UNDER THE HEAD SHORT TERM CAPITAL GAIN IN THE A. Y. 2008-09. 2. HOLDING THAT TRANSFER WAS COMPLETE IN ALL RESPEC TS ON 8.2.2008 WHEN FINAL CONSIDERATION OF RS. 22.5 LACS WAS RECEIVED BY THE APPELLANT. 3. HOLDING THAT ORAL REQUEST MADE BY THE APPELLANT TO CANCEL THE AGREEMENT COUPLED WITH RECEIVING BACK THE CONSIDERATION IN FULL INDICATED THAT THE A PPELLANT HAD RELINQUISHED HER INTEREST IN THE FLAT. 4. RELYING UPON THE JUDGMENTS OF BOMBAY HIGH COURT IN GEETADEVI PASARI V S. CIT - 17 DTR 280 (BORN) & CHATURBUZ KAPADIA V S. CIT - 260 ITR 491. 5. NOT CONSIDERING THE FACT THAT THERE WAS NO AGREE MENT OR DOCUMENT ENTERED INTO BY THE APPELLANT WHICH INDICATED THAT SHE HAD TRANSFERRED HER FLAT & FURTHER THAT THE SAID FLAT STOOD IN THE NAME OF THE APPELLANT EVEN AS ON THE DATE. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY O R DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. ASSESSEE, AN INDIVIDUAL, FILED HER RETURN OF INCOME ON 30.09.2009 DECLARING TOTAL INCOME AT RS. 3. 22 LAKHS.THE ASSESSING OFFICER(AO)COMPLETED THE ASS ESSMENT,U/S.143(3) OF THE ACT, DETERMIN - ING THE INCOME OF THE ASSESSEE AT RS.8.47 LAKHS. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT TAXING SHORT TE RM CAPITAL GAINS(STCG)OF RS.7.78 LAKHS. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THA T IN THE BALANCE-SHEET, THE ASSESSEE HAD SHOWN A LIABILITY OF RS.7.78 LAKHS IN THE NAME OF H ARISH D. PATEL (HDP).HE DIRECTED THE ASSESSEE TO SUBMIT DETAILS OF LIABILITY ALONG WITH THE DOCUM ENTARY EVIDENCES IN SUPPORT THEREOF. THE ASSESSEE VIDE HER SUBMISSION DATED 15.11.2011 STATE D THAT THE AMOUNT WAS PAYABLE TO HDP, THAT SHE HAD BOOKED A FLAT AND PAID ADVANCE OF RS.1.02 C RORES TO HDP,THAT THE WORK OF THE PROPERTY IN QUESTION WAS NOT PROGRESSING, THAT SHE ASKED HDP TO REFUND THE AMOUNT, THAT MONEY WAS REFUNDED AND SHE GOT RS. 1.10 CRORES, THAT PURCHASE AGREEMEN T WAS NOT CANCELLED TILL THE YEAR AND DUE TO DISPUTE WITH HDP FOR FINAL SETTLEMENT, THAT AMOUNT RECEIVABLE OF RS.7.78 LAKHS WAS SHOWN AS CURRENT LIABILITY, THAT IN THE WHOLE TRANSACTION TH ERE WAS NO SALE/TRANSFER/CANCELLATION OF PURCHASE- AGREEMENT OF PROPERTY, THE AMOUNT RECEIVED WAS IN N ATURE OF DAMAGE BEING CAPITAL RECEIPT. 2 ITA NO. 5450/M/2013 MRS. SONAL PARAG SHAH AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,TH E AO HELD THAT THE ASSESSEE HAD PURCHASED PROPERTY IN QUESTION FOR RS. 1.02 CRORES AND SOLD I T FOR 1.10 CRORES, THAT AT THE TIME OF ASSESSMENT PROCEEDINGS, DIFFERENCE AMOUNT OF RS. 7.78 CRORES H AD TO BE CONSIDERED AS GAIN OUT OF THE SUBJECT TRANSACTION, THAT SAME WAS IN NATURE OF CAPITAL GAI N.FINALLY, THE AO ADDED THE SAID SUM TO THE TOTAL INCOME OF THE ASSESSEE. 3 .AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM, IT WAS STATED THAT HDP H AD REFUNDED RS. 1.02 CRORES DURING THE MONTHS OF JANUARY AND FEBRUARY 2008,THAT HE DID NOT CANCEL THE PURCHASE AGREEMENT,THAT THE AGREEMENT DATED 08.05.2006 SUBSISTED TILL DATE,THAT EXCESS AMOUNT OF RS. 7.78 LAKHS WAS SHOWN AS CURRENT LIABILITY AS ON 31.03.2008, THAT AMOUNT OF RS. 1.02 CRORES WAS SHOWN ON ASSET SIDE AS A FIXED ASSET,THAT RS. 1.10 CRORES WERE SHOWN AS CURR ENT LIABILITY DUE TO HDP ON THE LIABILITY SIDE, THAT AFTER NETTING OUT THE NET LIABILITY CAME TO RS . 7,78,105/-,THAT NET LIABILITY WAS CARRIED FORWARD AND SHOWN AS SUCH FOR THE YEAR ENDED ON 31.03.2009, THAT THE AMOUNT IN QUESTION PERTAINED TO AY. 2008-09 AND NOT TO THE YEAR UNDER CONSIDERATION. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ASSESSMENT ORDER,THE FAA HELD THAT TRANSFER OF PROPERTY WOULD BE COMPLETE WITH TOTAL C ONSIDERATION WAS RECEIVED AND NOT ON THE DATE ON WHICH AGREEMENT WAS ENTERED FOR THE PURPOSE OF C OMPUTATION OF CAPITAL GAINS, THAT TRANSFER IN THE CASE UNDER CONSIDERATION WAS COMPLETED ON 08.02 .2008 ON WHICH DATE THE FINAL CONSIDERATION OF RS. 22.5 LAKHS WAS RECEIVED BY THE ASSESSEE, THA T ORAL REQUEST MADE BY THE ASSESSEE TO CANCEL THE AGREEMENT COUPLED WITH RECEIVED RATE CONSIDERIN G FULLY INDICATED CLEARLY THAT THE ASSESSEE HAD RELINQUISHED HER INTEREST IN THE ABOVE FLAT, THAT T ILL 19.07.2013 SHE DID NOT RECEIVE ANY FURTHER CONSIDERATION OVER AND ABOVE WHAT WAS RECEIVED ALRE ADY, THE TRANSFER WAS COMPLETED IN ALL RESPECT,THAT THE ASSESSEE'S CASE WAS COVERED BY THE PROVISIONS OF SECTION 2(47)R.W.S. 45 OF THE ACT. HE FURTHER HELD THAT STCG WAS REQUIRED TO ASSESS FO R THE AY 2008-09 SINCE THE ENTIRE CONSIDERATION HAD BEEN RECEIVED BY FEBRUARY 2008, T HAT THE AO HAD COMPUTED STCG IN AY 2009- 10. ACCORDINGLY, HE DELETED THE STCG FOR THE YEAR U NDER CONSIDERATION. HOWEVER, HE DIRECTED THE AO TO TAKE SUITABLE ACTION BY ISSUING OF NOTICE U/S . 148 TO RE-OPEN THE ASSESSMENT FOR THE AY 2008-09 TO BRING TO TAX ESCAPED STCG. 4 .BEFORE US,AUTHORISED REPRESENTATIVE(AR) SUBMITTED THAT THE FAA HAD GONE BEYOND HIS JURISDICTION,THAT HE COULD NOT DIRECT THE AO TO RE- OPEN THE ASSESSMENT FOR ANOTHER AY.,THAT CAPITAL GAIN COULD ARISE IN TERMS OF SECTION 45 OF THE ACT ONLY WHEN THERE WAS A TRANSFER OF CAPITA ASSET, THAT IN THE CASE UNDER CONSIDERATION THERE WAS NO T RANSFER OF CAPITAL ASSET,THAT THE PURCHASE AGREE MENT,DATED 08.05.2006,ENTERED WITH HDP WAS NEVER CA NCELLED,THAT SHE WAS NOT HAVING POSSESSION OF THE FLAT,THAT QUESTION OF PARTING WITH THE POSSE SSION OF THE FLAT COULD NOT ARISE.HE RELIED UPON TH E DECISION FOR HON'BLE MADRAS HIGH COURT DELIVERED IN THE CASE OF T.A. KRISHNASWAMY (2 DTR 143)AND THE CASE OF SHIVALINGAM CHETTIAR(66 ITR 586 ) OF HON'BLE APEX COURT.DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE FAA. 5 .WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH HDP AND HAD PAID RS. 1.02 CRORES, THAT IN THE MONTHS OF JANUARY AND FEBRUARY 2008 SHE GOT REFUND FROM HDP O F RS. 1.10 CRORES, THAT THE NET LIABILITY WAS SHOWN IN THE BALANCE-SHEET FOR THE FIRST TIME DURIN G THE AY.2008-09, THAT THE AO DID NOT TAKE ANY ACTION ABOUT THE SAID ENTRY FOR THAT AY.,THAT DURIN G THE YEAR UNDER CONSIDERATION THE AO TAXED THE AMOUNT IN QUESTION AS STCG, THAT IN THE APPELLATE P ROCEEDINGS, THE FAA HELD THAT AMOUNT IN DISPUTE WAS TO BE TAXED IN AY 2008-09 BY ISSUING NO TICE U/S 148 OF THE ACT. INCOME TAX PROCEEDINGS ARE AY.SPECIFIC AND HAVE TO BE ADJUDICATED ACCORDINGLY.INCOME ACCRUING/ARISING IN A PARTICULAR AY.HAS TO BE ASSES SED IN THAT IN YEAR ONLY.WHILE DECIDING THE APPEAL FOR A PARTICULAR YEAR,THE FAA CANNOT DIRECT THE AO TO REOPEN THE ASSESSMENT FOR ANOTHER 3 ITA NO. 5450/M/2013 MRS. SONAL PARAG SHAH YEAR.IN THE MATTER OF MURALIDHAR BHAGVANDAS(52ITR33 5)THE HONBLE APEX COURT HAS HELD AS UNDER: SECTION 31 PRESCRIBES THE MODE OF DISPOSAL BY AN A PPELLATE ASSISTANT COMMISSIONER OF AN APPEAL PREFERRED TO HIM: THE APPEAL BEFORE HIM IS CERTAINL Y CONFINED TO AN ASSESSMENT YEAR; AFTER HEARING THE APPEAL, HE CAN EITHER CONFIRM, REDUCE, ENHANCE OR ANNUAL THE ASSESSMENT; HE CAN SET ASIDE THE ASSESSMENT AND DIRECT THE INCOME-TAX OFFICER TO MAK E A FRESH ASSESSMENT. THE VARIOUS SUB-SECTIONS OF THAT SECTION DESCRIBE IN DETAIL THE ORDERS OR DI RECTIONS THAT CAN BE MADE OR ISSUED BY HIM IN RESPECT OF VARIOUS MATTERS; BUT NO POWER IS CONFERR ED ON HIM TO MAKE AN ORDER OR ISSUE DIRECTIONS IN RESPECT OF AN ASSESSMENT OF A YEAR WHICH WAS NOT THE SUBJECT-MATTER OF THE APPEAL. IT MAY, THEREFORE, BE HELD, ON A CONSTRUCTION OF THE PROVIS IONS OF SECTION 31, THAT THE JURISDICTION OF THE APPELLATE ASSISTANT COMMISSIONER IS STRICTLY CONFIN ED TO THE ASSESSMENT ORDERS OF A PARTICULAR YEAR UNDER APPEAL. IN THE MATTER BEFORE US,THE FAA HAS DIRECTED THE AO TO PASS ASSESSMENT FOR ANOTHER AY. AND THE APPEAL OF THAT AY.WAS NOT PENDING BEFORE HIM. IT IS SAID THAT THE FAA MAY HOLD, ON THE EVIDENCE, THAT THE INCOME SHOWN BY THE ASSESSEE WAS NOT THE I NCOME FOR THE RELEVANT YEAR AND THEREBY EXCLUDE THAT INCOME FROM THE ASSESSMENT OF THE YEAR UNDER APPEAL. THE FINDING IN THAT CONTEXT IS THAT THE INCOME DID NOT BELONG TO THE RELEVANT YEAR . HE MAY INCIDENTALLY FIND THAT THE INCOME BELONGED TO ANOTHER YEAR,BUT THAT IS NOT A FINDING NECESSARY FOR THE DISPOSAL OF AN APPEAL IN RESPECT OF THE YEAR OF ASSESSMENT IN QUESTION,WHEREAS HE IS SUPPOSED TO PASS THE ORDER FOR A PARTICULAR YEAR.THE REASON BEHIND IT IS THAT THE SUBJECT-MATTE R OF AN APPEAL IS THE ASSESSMENT OF INCOME WHICH FORMS PART OF THE ORDER OF ASSESSMENT IN THE LIGHT OF THE RETURN OF INCOME FILED BY AN ASSESSEE AND RETURN IS FILED FOR A PARTICULAR YEAR. IN LIGHT OF THE ABOVE DISCUSSION WE ARE OF THE OPIN ION THAT THE ORDER OF THE FAA TO TAX THE DISPUTED SUM IN EARLIER AY.WAS NOT VALID.REVERSING HIS ORDER ,WE DECIDE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FI LED BY THE ASSESSEE STANDS ALLOWED. 0,1 #+, 2 3 ) 4 ) , 5 . ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD ,FEBRUARY,2015. !/ ) .$ ! 6 7# 3 0- , 201 5 ) : SD/- SD/ ( /JOGINDER SINGH) ( !' / RAJENDRA) / JUDICIAL MEMBER ! ! ! ! / ACCOUNTANT MEMBER / MUMBAI, 7# /DATE: 03.02.2015 SK !/ !/ !/ !/ ) )) ) ',; ',; ',; ',; , 4. THE CONCERNED CIT / = > 5. DR E BENCH, ITAT, MUMBAI / ;? ',# , . . . 6. GUARD FILE/ 0 (;, ', //TRUE COPY// !/# / BY ORDER, @ / DY./ASST. REGISTRAR , /ITAT, MUMBAI